Perhaps one of the most pervasive topics in economic literature over the last few years has been the sustained slowdown in productivity growth. Central bankers, politicians, academics, and financial market participants have been writing about it for years; unfortunately, none have had any definitive answers. One of the things that has been particularly strange about this slowdown is that it has come at the same time as seemingly great leaps in innovation. Corporate profit margins, meanwhile, have also been exceptionally high and seemingly durable—not something we would normally expect in a low productivity environment. The answer to this productivity puzzle is not just of academic interest, it has very real implications for all of our lives; it is very much an issue across the developed world and is increasingly impacting the emerging markets as well. It also has very significant implications for investors, one aspect of which we discuss in this week’s Economics Weekly.
For a copy of this report or to subscribe to the Economics Weekly or Economic Indicators reports, please contact your William Blair representative.
Richard de Chazal, CFA is a London-based macroeconomist covering the U.S. economy and financial markets.